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New York State Issues Guidance on Aircraft Tax Changes
A legislative change in New York will modify the state’s commercial aircraft exemption effective June 1. Certain transactions involving the sale, purchase and use of aircraft that were previously exempt from sales and use taxes will now be taxable. The state’s Department of Taxation and Finance issued guidance outlining these changes. NBAA is working with the New York Aviation Management Association to obtain additional guidance as to whether aircraft based in New York that previously were exempt from taxation will be grandfathered or subject to the tax. Aircraft owners concerned with this change should consult qualified tax counsel before making any changes to the aircraft’s home base or operating structure.
- Review the New York guidance
- Review an in-depth article on changes to the commercial aircraft exemption
Overview
The 2009-2010 budget package approved by the legislature in the state of New York contains a number of provisions that could have a negative impact on business aviation. The following budget items are especially harmful:
- Addition of a 5% “luxury tax” on the purchase of new general aviation aircraft in excess of $500,000. (Provision defeated- will not go into effect)
- The sales tax exemption on the maintenance and repair of general aviation aircraft that is currently available would expire on December 2009.
- Elimination of a sales and use tax exemption for commercial aircraft that are owned by a company to transport agents, employees, officers, members, partners, managers, or directors of that company. (Included in the budget)
- Elimination of a sales and use tax exemption on aircraft purchased by a nonresident of New York but primarily used to transport affiliated employees that are residents of New York. (Included in the budget)
- New York’s contribution to the Federal Airport Improvement Program (AIP) would be cut from $8 million to $4 million
NBAA Involvement
NBAA has been actively involved in the New York budget process since early 2009. Dean Saucier, NBAA Northeast Regional Representative, has worked closely with the New York Aviation Management Association (NYAMA) and Members based in the state to eliminate many of the harmful provisions mentioned above from the budget.
Most importantly, the luxury tax on general aviation aircraft has been removed from the budget. In addition, language to allow for the transfer of unused AIP funds to the New York State airport improvement grant program.
While these are important victories, NBAA members based in New York must continue their advocacy efforts. The sales tax exemption for general aviation maintenance and repair services will expire on December 1, 2009 unless action is taken by the legislature. In addition, the exemption on commercial aircraft has been eliminated. Both of these changes will negatively impact business aviation in New York.
What Can You Do?
NBAA Members are strongly encouraged to contact their legislators to advocate for the extension and enhancement of the sales tax exemption for general aviation. In addition, Members should register their opposition to the elimination of the commercial aircraft exemption. Due to Member action it is possible that this exemption could be restored in future legislation. The following talking points may be helpful in making the case for these exemptions:
- Airports are economic engines fueling growth in the communities they serve. The aviation industry contributes over $35 billion in annual economic activity in New York State and almost 350,000 state residents work directly or indirectly in aviation.
- More than $2.8 billion in State and local taxes are generated from aviation activities.
- Aviation is one industry that is well positioned to help itself and the State’s economy.
- Airports are revenue generators for the state; proposals that add unnecessary financial burdens on the industry will only chase business to neighboring states that are aggressively attracting permanently based aircraft, jobs and businesses away from New York.
Members can obtain contact information for their legislators by visiting:
For additional information, contact NBAA’s Dean Saucier at dsaucier@nbaa.org
International Business Aviation Council Ltd.